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Saturday, July 30, 2011

SANCO TRANS - is a Chennai based company operating in Transportation and logistics space .Company operating two container freight stations, one in Chennai and the other in Thoothukudi. Its Chennai facility is the first CFC started in private sector in India way back in 1989.Company is also handling Air cargo and warehousing operations.An area of 2 Laks Sqft is available for its warehousing service. Sanco is also in the space of hiring material handling equipments including various types of cranes,Tippers,trucks..etc.It is also doing customs clearance services and transport operations.Company is planning to expand its warehousing operations by creating additional space.Company has shown good growth in last financial year.Sanco's fortunes are directly linked with the growth in India's export/import growth which shows a positive sign in recent past.In last FY company posted a turnover of Rs.63 Cr and a net profit of Rs.8.30 Cr .On its tiny equity base of just 1.8 Cr EPS was Rs.46/-.In the first quarter of this FY , Sanco posted a turnover of Rs.17.5 Cr v/s Rs.12 Cr and a net profit of Rs.2 Cr v/s just 34 lakhs. First qtr EPS is Rs.11.25 v/s Rs 2.At CMP of Rs.238/- it is trading at a P/E multiple of 5 on FY 2011 EPS. Logistics is a space where our country need much improvement and scope is large in this space. Sanco is a pioneer in this industry with deep knowledge in this space and it is a one stop service point for exporters and importers.Considering the growth opportunities,experience of management and cheap valuation of stock - there is every chance for a re-rating in this scrip from current market price of Rs.238/-

What is the debt ceiling? It’s a legal cap on the amount of debt the US government can accrue. The US and Denmark are the only democracies that have debt ceilings. The Americans adopted theirs in 1917, so Congress could keep tabs on the president’s spending. It was $11.5 billion then, and is $14.3 trillion today. Congress has raised the ceiling routinely, including 25 times under presidents Ronald Reagan and George W Bush. The debt ceiling has really been unnecessary since 1974, when Congress started passing detailed budgets.Why has it become the biggest issue in US politics? Republicans blame the Obama administration for the rapid increase in the budget deficit and 9.2 per cent unemployment. It’s an obsession for the right-wing Tea Party, the biggest winner in last November’s mid-term elections. The Republican majority in the House of Representatives came to office on promises of slashing spending and shrinking government. They have transformed the debt ceiling vote into high political drama, with the goal of poisoning Obama’s presidency and preventing his re-election.Why does it need to be resolved by next Tuesday? August 2nd is the “default deadline”, though some analysts say it can be pushed back to mid-August. If Congress doesn’t raise the debt ceiling by Tuesday, says the Treasury, the US will run out of room to borrow, and will no longer be able to pay all its bills. The government issues 80 million cheques each month, and the Treasury has begun deciding which will not be sent. It’s a tough call, between interest payments to foreign creditors, pensioners, wounded veterans and student recipients of government loans. The treasury secretary, Timothy Geithner, has spoken of “catastrophic economic consequences for citizens”. The US’s credit rating is almost certain to be demoted from AAA to AA if the crisis isn’t sorted out by Tuesday. That will raise the interest rate on US treasury bonds, mortgages and bank loans, at an estimated cost of $100 billion to the US economy. The dispute has dragged on so long that the US may lose its credit rating anyway, especially if the last-minute, patchwork solution does not cut at least $4 trillion from the deficit. More dire predictions include a stock market crash, a return to recession (which is theoretically over) or a global financial crisis on the scale of that provoked by the fall of Lehman Brothers in 2008.What is most likely to happen? There are at least four plans floating around Capitol Hill that could raise the ceiling by Tuesday, thus temporarily lifting the threat of a US default. Negotiations will be hard and furious all weekend. By pure obstinacy, the Republicans have gained the upper hand, but their leverage is weakened by divisions between moderates and the Tea Party. A compromise is likely to include a trillion or two in spending cuts, a slightly smaller rise in the debt ceiling, and the formation of a bipartisan commission to identify further spending cuts later.Will this be the end of the problem? No, which scandalises many Americans, who have seen this crisis coming for at least seven months. Politicians still reject two obvious solutions to the ballooning deficit: higher taxes on the rich and on corporations, and lower spending on the entitlement programmes, Social Security and Medicare. Republicans refuse to raise taxes. Democrats refuse to cut entitlements. Until or unless both sides give ground, debt and deficit spending will hobble the US economy.

Tuesday, July 26, 2011

Tasty Bite Eatables is one of my favorite stock , mainly because of its professional management. More than once I have recommended it here ,last time @ Rs.145/- on May 28,2011 ( Read it HERE ) .Today it closed around Rs.225 /- , an appreciation of about 50 % in two months.I have received many queries from our readers about the current stand on this stock after a sharp move in short time. In my opinion , it is a definite HOLD even at current price for any true investor. This company is doubling its capacity and it is expected to get the full benefit of this expansion only from next financial year . Moreover , Since Indian market is now mature enough to accept products like it produced , we can't rule out the chance of launching its products even in Indian market in coming years . Its recently renovated Tasty Bite Research Center (TBRC) is expected to play a crucial role in introducing many more new products going forward.In nutshell , it is a story which is yet to unfold. Company is taking each and every step carefully for a bright future . Patience is necessary to reap the benefit , but I feels this will give good return even from current level for long term investors.

Disclosure : I am holding this stock , so my views on this stock may be biased

DFM FOODS LTD

DFM Foods is originally recommended HERE on 19th September 2010 @ Rs.48/- which is currently trading @ Rs.144/- , an appreciation of about 200% in less than one year. Company has recently hiked its capacity and showing good growth both in top and bottom line . This trend is expected to continue in near future. One may HOLD it for long term . Some professionalism in its management will surely change the image of this company.

Saturday, July 23, 2011

Elder Healthcare - Yes ,its name is bit confusing.Even if its name sounds like a pharma company ,FMCG/Personal Care is the correct sector in which it can be included.This company is part of 800 Cr Elder group which is well known in pharma sector through their another company

Elder pharmaceuticals.Company selling many products comprises of OTC products in pain management, fairness segment , oral care, lip care ,burn categories, Men,s and Women's grooming ..etc..Many of these products are in-licensed products of reputed multinational brands .This means that the brand is not owned by the company but it is only produced/distributed by the company. Such agreements always causing for thin margins for Elder .It is selling many international brands in India which includes - Tiger Balm, Blistex Lipcare balm,Essance Room Freshner,Fairone Fairness Cream,Neemtone Facewash,BeYu brand Cosmetics, Fuel deodorant body spray ..etc( For full product list click HERE). In recent times as a change in its business strategy, Elder Healthcare is reducing its dependency on in licensed products and starts to concentrating in building their own brands.

Dropping the sales of 'Tiger balm' and introduction of 'Octane' Brand deodorant is the best example of this changing strategy.Company is also planning many more new products its own. Effect of this strategy is clearly visible in March quarter result where company posted improved margins for the first time in many years.In march quarter Company posted a turnover of Rs.39 Cr and a net profit of Rs.1.33 Cr where it posted just Rs.17 Cr sales and and a profit of 40 lakhs in the same period in last year.Now the management is planning to make it a Rs.300 Cr company in two years and reduce the ratio of in licensed - own products from current level of 90:10 to 50:50.. Company having a small equity base of just 4 Cr and out of it 50 % is held by the promoters itself.In last full year Company posted a turnover of Rs.113 Cr,net profit of Rs. 1.74 Cr and an EPS of Rs.4.35. On successful launch of own products like recently launched 'Octane' its margins will surely improve.All FMCG company's are posting healthy gains mainly due to the middle class spending story of India in recent times both in terms of turnover and share price.Elder healthcare is expected to show the same growth which shown in last quarter of the last financial year. If it happens there is good scope for sharp appreciation even from current level considering the small equity/low floating stock nature of this FMCG company.

Wednesday, July 20, 2011

WPIL is a Kolkata based manufacturer of various type pumps for sectors like Irrigation,Mining,Water , waste water treatment..etc.What is unique for this company is that WPIL is the only company ( through joint venture) in India having expertise to manufacture certain type of pumps used in nuclear and thermal power plants.Earlier this company was with BN Khaithan group and in 2006 they completely exited from this company.The new owners( Hindustan Udyog group) have taken many steps to improve its performance thereafter.Some important acquisitions and some strategic alliances are already made in this direction.Company's joint venture with Clyde Union Pumps for manufacturing special pumps for thermal plants and nuclear power plants is expected to bring good business in future . In another important buyout ,WPIL recently acquired UK based ' Mathers Foundry ' which makes steel castings used in equipment for the oil and gas,nuclear, paper, chemical and power generation sectors .Mathers is the sole manufacturer of castings in the ZERON range of Super Duplex alloys . ZERON is a super duplex stainless steel (with high strength and corrosion resistant ) that resists all forms of corrosion attack in seawater service.WPIL's thrust in waste water treatment , mining and power plant related pumping systems creating special attention among many other pump makers. After the change in management control company is showing steady growth. For the last FY , WPIL posted a turnover of Rs.220 Cr and a net profit of Rs.15.7 Cr.On an equity base of Rs.7.9 Cr EPS was Rs.20/- .Another encouraging factor is the aggressive open market purchase of promoters in the recent past . CMP is Rs.187/-

Friday, July 15, 2011

Reduction in the subsidy on LPG and rationing of the subsidized LPG Cylinders for consumers will be a reality in near future.Talk on this subject is already on and it may take shape eventually.Who will benefit from such a scenario - no doubt it is private LPG distributors. When the difference of the cost of LPG cylinders distributed by PSU's and private players become nil or negligible Private LPG distributors will get a chance to compete with PSU's and increase their market share. When we look into the investment angle of this possible changes , we have not much choices left .Only very few private LPG distributors are available in listed space. EASTERN GAS - is one such company from Kolkatta which is not very popular for investor fraternity till now.Eastern gas is currently concentrating in distributing commercial Cylinder under the brand name ' EAST GAS' in Kolkata and nearby areas. It is distributing LPG in 17 and 33 kg commercial cylinders .Since the subsidy is very huge for non commercial cylinders, at present it is not viable to distribute home cylinders in a big way .But the situation will change when there is a reduction in subsidy as mentioned above. Company having a 30,000 MT / month LPG refilling plant at Durpagur.Eastern Gas also having a marketing agreement with Indian Oil Petronas Private Limited. Company is also in Auto LPG Segment and planning to start 100 auto LPG filling stations in few years.It also having plans to start joint ventures for city gas distribution . All together , policy changes in this sector is expected to change in favor of Private LPG distributors. Number of listed companies from this space is very few . Hence , once there is some clarity emerges in this sector, first comers with necessary infrastructure will benefit a lot and in such a situation Easter Gas may turn as a dark horse .For the last financial year Eastern Gas posted a turnover of Rs.90 Cr v/s Rs.63 Cr and a net profit of Rs.1 Cr v/s 63 Lac. At CMP of Rs.18/ - nothing to loose .

Wednesday, July 13, 2011

More than once I have recommended this scrip from Rs.73 /- level onwards .Currently it is trading around Rs.320/- which is close to its all time high. High risk takers can still hold it and low to medium risk takers may book partial profit at current level.

Saturday, July 9, 2011

Ramky Infrastructure is in the field of construction and Infrastructure since 1994. This company is jointly promoted by Alla Ayodya Rami Reddy and Y R Nagaraja . Company is concentrating in water and waste water, irrigation, transportation, power, Road building & industrial construction activities . Company having good experience in water and waste water related projects and already completed more than 100 projects in this segment.More than half of its top line is generated from water, waste water and irrigation related activities and this sector having very good potential.Company's own designing and engineering team which specializing in this field is an added advantage.Through its subsidiaries and SPV's , Ramky is operating out side India and currently executing some projects like Gabon Special Economic Zone, West Africa ..etc through its subsidiary.Company is also active in many road projects pan India.Recently company received orders worth Rs.600 Cr for various infrastructure development projects. Currently company having an order book of Rs.12000 Cr which gives very good visibility.Ramky shows a CAGR of 40 % for the past 5 years.On a consolidated basis Company posted a turnover of Rs.3147 Cr , net profit of Rs.206 Cr and an EPS of Rs.39 in last FY. Company issued share at Rs.450/- in its IPO and due to lower valuation of infrastructure company's in current market it is available @ Rs.280/- I think Ramky Infra is one of the best bet from infra space and it will out perform with a re- rating in this sector .Investors can bet on this with a long term view at CMP of Rs.280/-

Tuesday, July 5, 2011

Even if there is different opinions on Plastic , consumption of the same is surging every year. Convenience and low cost is the main reason for the growth of this sector .There is lot of plastic related product manufacturers in our country especially in unorganized sector.But they are not much bothered about branding and value addition.Nilkamal and Wimplast are two big players in branded and value added category in India . On conventional valuation parameters both these companies are qualifying for an investment.Currently many of the companies from this sector other than VIP Industries are ignored by the market players . Both these company's financials are very solid and paying good dividend . I feels , in future there is every chance for a re rating in these companies as happened in kitchenware companies like TTK Prestige and Hawkins... Indian consumption theme is expected to auger well for these companies too in long run.

Wimplast - makers of CELLO brand -posted a turnover of Rs.158 Cr and a net profit of Rs.18 Cr . On an equity base of Rs.6 Cr it posted an EPS of Rs.30 in FY 2011. At current market price of Rs.200/-,Wimplast is trading at a P/E multiple of 6.6

Nilkamal is the biggest player which posted a turnover of Rs.1252 Cr and a net profit of Rs.52 Cr . On an equity base of Rs.15 Cr it posted an EPS of Rs.37 in FY 2011.Company is rapidly expanding and its retail venture named @Home ( a one stop shop for all home needs) posted turnaround performance in FY 2011.

Both these company's are suitable for investors with medium to long term. Keep watching the raw material cost which is subject to the changes in crude price

Saturday, July 2, 2011

Indag Rubber is a Khemka Group company mainly engaged in the manufacturing of tread rubber for auto sector. It makes pre-cured tread rubber (PTR), rubber strip gum, universal spray cement and tyre envelops ..etc Company having two manufacturing units , one in Himachal Pradesh and other in Rajastan . Indag is the company which introduced cold retreading technology in India . Company's financials are strong with minimum debt and higher promoter stake. Last year company expanded its capacity at Himachal unit and current capacity from this unit alone is 1200 ton tread rubber and 1800 ton rubber gum. Cost of raw material was a big problem for this company in recent past . But the US decision to discontinue the easy money policy for the time being is expected to bring down commodity prices in near future. Natural rubber prices are showing some weakness and it it expected to show this trend in coming months .If this trend continuous , it will surely help Indag to improve its margins. For the financial year ended March 2011 , Company posted a turnover of Rs.150 Cr and a net profit of Rs.11 Cr.Full year EPS was Rs.20 . At CMP of Rs.95 , Indag is trading at a P/E multiple of just 4.75 which is a risk less bet at CMP . Keep watching the movement of the cost of raw materials closely.